Equity Use -- Fundamental Analysis
A Public Company's tap into Equity appears to be on the rise given current credit market conditions.
It should come as no surprise to traders/investors that companies will from time to time use their equity to further their goals. It is expected-- and in many cases desired -- for keeping companies afloat and/or moving them forward...
However, there is no denying the "pain" that comes from the dilution (fundamentally) and float "bloat" (technically).
Given that the use must exist and the accompanying pain must be tolerated to trade, what makes the best use to satisfy both company and trader/investor?
In general terms, to get a basic understanding of the "vehicles," let's break them down into 3 main categories:
1. Offering (Public and Registered)
--Quick (and in some cases sharp) share price drop . Pain is then over
--Company sold (desired) –vs- Investor Sold (useless)
--Shares immediately (in terms of weeks) to retail—then assume “normal” behavior
--Shortest definitive influential period—all “standard”
--Bump/Blip
2. Private Placement (Private and not registered)
--Blunt Pain – queasy period – pain returns
--Size of Offering w/ or w/o accompanying warrants determines pain threshold
--Shares to “Qualified Investors”—could be “pledged" or go to 2ndary market—eventually (6 month waiting period if unregistered) enter retail—then assume normal behavior
--Prolonged influential period --Choppy Zone but can predict relatively "safe" area
3. Convertibles (Private where conversions may be either registered or not)
--Blunt to Quick – then Chronic Blunt with aperiodic Sharp episodes
--Shares –vs- Notes/Debentures (include the crossbreed SEDA in this category)
--Shares upon conversion—could be “pledged" or go to 2ndary market—eventually (6 month waiting period if unregistered) enter retail—then assume normal* behavior
--Open-ended influential period proportional to conversion feature w/ “floorless” effectively creating infinity*
--Continuing Spiral (* for ruthless financiers, a typical cycle of shorting; converting; pumping & selling will eventually kill the company but drive enormous profits for the financier)
Example #1
Example #2
Example #3
It should come as no surprise to traders/investors that companies will from time to time use their equity to further their goals. It is expected-- and in many cases desired -- for keeping companies afloat and/or moving them forward...
However, there is no denying the "pain" that comes from the dilution (fundamentally) and float "bloat" (technically).
Given that the use must exist and the accompanying pain must be tolerated to trade, what makes the best use to satisfy both company and trader/investor?
In general terms, to get a basic understanding of the "vehicles," let's break them down into 3 main categories:
1. Offering (Public and Registered)
--Quick (and in some cases sharp) share price drop . Pain is then over
--Company sold (desired) –vs- Investor Sold (useless)
--Shares immediately (in terms of weeks) to retail—then assume “normal” behavior
--Shortest definitive influential period—all “standard”
--Bump/Blip
2. Private Placement (Private and not registered)
--Blunt Pain – queasy period – pain returns
--Size of Offering w/ or w/o accompanying warrants determines pain threshold
--Shares to “Qualified Investors”—could be “pledged" or go to 2ndary market—eventually (6 month waiting period if unregistered) enter retail—then assume normal behavior
--Prolonged influential period --Choppy Zone but can predict relatively "safe" area
3. Convertibles (Private where conversions may be either registered or not)
--Blunt to Quick – then Chronic Blunt with aperiodic Sharp episodes
--Shares –vs- Notes/Debentures (include the crossbreed SEDA in this category)
--Shares upon conversion—could be “pledged" or go to 2ndary market—eventually (6 month waiting period if unregistered) enter retail—then assume normal* behavior
--Open-ended influential period proportional to conversion feature w/ “floorless” effectively creating infinity*
--Continuing Spiral (* for ruthless financiers, a typical cycle of shorting; converting; pumping & selling will eventually kill the company but drive enormous profits for the financier)
Example #1
| REXX [NASD] |
| Rex Energy Corporation |
| Basic Materials - Oil & Gas Drilling & Exploration - USA |
Example #2
| APWR [NASD] |
| A-Power Energy Generation Systems, Ltd. |
| Utilities - Electric Utilities - China |
Example #3
| OCNF [NASD] |
| OceanFreight, Inc. |
| Services - Shipping - Greece |
Posted by Cove Reflections at 2/4/2010 3:25 AM 
Categories: Research and Analysis
Tags: FA OCNG APWR PIPE CD Debenture Convertible Warrant Option Share
Categories: Research and Analysis
Tags: FA OCNG APWR PIPE CD Debenture Convertible Warrant Option Share
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